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Cost Accounting Standards Board (CASB)
The Institute of Cost Accountants of India, recognizing the need for structured approach to the measurement of cost in manufacture or service sector and to provide guidance to the user organizations, government bodies, regulators, research agencies and academic institutions to achieve uniformity and consistency in classification, measurement and assignment of cost to product and services, has constituted Cost Accounting Standards Board (CASB) with the objective of formulating the Cost Accounting Standards.
The Expert Group constituted by Ministry of Corporate Affairs has specifically highlighted the need for developing Cost Accounting Standards on the basis of Generally Accepted Cost Accounting Principles. To address this issue the CASB is working hard to develop Cost Accounting Standards. The Board has so far released 19 Cost Accounting Standards and document on Generally Accepted Cost Accounting Principles.
The structure of Cost Accounting Standard consists of Introduction, Objectives of issuing standards, Scope of standard, Definitions and explanations of the terms used in the standard, Principles of Measurement, Assignment of Cost, Presentation and Disclosure.
While formulating the Cost Accounting Standards, the CASB takes into consideration the applicable laws, usage and business environment prevailing in India. CASB also gives due consideration to the Cost Accounting Standards, principles and practices being followed by the other countries in the world. If due to subsequent changes in the law, a particular standard or any part thereof becomes inconsistent with such a law, the provisions of the said law shall prevail.
Starting from 2001-02 CASB has met 60 times. Under the Chairmanship of various Chairmen, it has covered a lot of distance and some of the major achievements are given below;
Major announcements by the Board:
  • Issued 19 Cost Accounting Standards;
  • Released Generally Accepted Cost Accounting Principles (GACAP) Document;
  • Revised CAS-3 on Overheads & CAS-2 on Capacity Determination
  • Released Guidance Notes on CAS-4, CAS-6, CAS-7, CAS-8, CAS-9 and CAS-11
  • Released Exposure Draft of Guidance Notes on CAS-10
Besides above the CASB Secretariat has also organised a number of programmes on Cost Accounting Standards for members and others throughout India. It also organises meetings with the stakeholders to discuss the various flagged issue to arrive at consensus on the same.
Some major activities on the Cards are given as below:
  • Guidance Notes on CAS-12 & CAS-14;
  • Revision of CAS-1& CAS-5;
  • Drafts of new CASs ready;
  • Limited revision of CASs already issued by the Institute.
List of 39 items on which CASs are to be developed / developed
 A. COMPONENTS OF COST:  B. COST ACCOUNTING METHODOLOGY AND PROCEDURES:
 1.   Materials Cost (CAS 6)  21.  Classification of Cost (CAS 1)
 2.  Employee Cost (CAS 7)  22.  Presentation of the cost statements
 3.  Cost of Utilities (CAS 8)  23.  Identification & recognition of Cost Centres
 4.  Packing Material Cost (CAS 9)  24.  Capacity Determination (CAS 2)
 5.  Direct Expenses (CAS 10)  25.  Valuation of Captive Consumption (CAS -4)
 6.  Administrative Overheads (CAS 11)  26.  Stock Valuation
 7.  Repairs and Maintenance Cost (CAS 12)  27.  Cost Variances
 8.  Cost of Service Cost Centre (CAS 13)  28.  Cost of conversion
 9.  Transportation cost  29.  Determination of Arm’s Length Price
 10  Pollution Control Expenses (CAS 14)  30.  Joint Product and By-product Cost
 11.  Production/ Operation Overheads (CAS-3)  31.  Determination of Average Transportation Cost (CAS 5)
 12.  Head/Corporate Office Overheads (CAS-3)  32.  Reconciliation of Cost and Financial Statements.
 13.  Selling & Distribution Overheads (CAS 15)  33.  Shared Services Cost including outsourcing
 14.  Depreciation  34.  Profit Centres and Reportable Segments under Cost Reporting.
 15.  Amortization  35.  Return on Capital Employed.
 16.  Royalty, Technical Know-how and Intellectual Property Charges  36.  Predatory Pricing.
 17.  Research and Development Expenses  37.  Non-cost Income and Expenses.
 18.  Quality Control Expenses.  38.  Capital Assets manufactured in house
 19.  Interest and Borrowing Cost. 39.   Valuation of Business
 20.  Treatment of Revenue for Cost Statements (Including treatment of Government Grants, subsidies and incentives in Cost Accounts)